Manufacturers led by the largest Chinese concern, BYD, have opened a new front in the fight for dominance in the automotive industry. Now, in the era of electric vehicles, “Made in China car” to be a global symbol of luxury. In this way, the Chinese challenged companies once considered to be the flagship examples of sophistication in the automotive industry, such as Mercedes and BMW. After European companies began to fail on the Chinese market, manufacturers from the Middle Kingdom are taking the fight to Europe and making great progress.
The most clear signal of the influence of the Chinese automotive industry on the market is the poor results of European companies. Mercedes announced the weakest profitability since the former car and truck conglomerate broke up in 2021. Porsche said it was considering cost cuts and reviewing its model lineup after falling demand in China caused profits to plummet.
China shook up the auto industry with its launch cheap electric vehicleswhich caused concern in the European Union and resulted in the introduction of tariffs on Chinese cars. Meanwhile, luxury brands have previously been perceived as safer due to their heritage and high-end status. However, this assumption is now being questioned. And there is something to fight for, because the global premium and luxury vehicle market is worth $1.2 trillion.
Chinese offensive in the premium class
At the Paris Motor Show Hongqi with FAW Group i Yangwang with BYD presented limousines and SUVs that are to compete for European customers with vehicles from Mercedes, Porsche and even Rolls-Royce.
Nio Inc. has opened luxury showrooms in cities such as Berlin, Oslo and Amsterdamto showcase models like his EL8 SUV for 95,000 euros.
Polestarbelonging to Geely Automobilehas started deliveries in some European markets and plans to enter the French, Hungarian and Polish markets in 2025.
BYDwhose brand Yangwang sells a luxury off-road vehicle that can float on waterbuilds relationships with local dealer groups.
The level of technological advancement is visible at Xiaomi. The company, known as the “Apple of China”, has pledged to invest $10 billion to enter the car market. In March, it launched the SU7 modelaiming to compete with vehicles such as Porsche Taycan. The sleek Chinese sports car has already caused a stir in the automotive industry.
BMW is the only German carmaker in the world’s top 10 in terms of digital strengths / Bloomberg
The Chinese sensed the weakness of European producers
China’s push into luxury cars comes at a delicate time for European carmakers. BMW, Aston Martin and Porsche’s parent company Volkswagen have all warned of weaker-than-expected earnings in recent weeks. They forecast only a slight increase, largely due to a slowdown in the world’s largest car market.
Over the years, consumers in They bought more Mercedes S-class sedans in China than anywhere elseand the country was one of the few markets where demand for the brand’s ultra-luxurious Maybach was high.
Meanwhile, the launch Tesla Model S in 2012, it challenged the dominance of European brands in the luxury car segment and changed consumers’ perception of automotive excellence towards digital functions. Companies like BYD and Nio follow this path with advertising its dominance in software and battery technology.
“Chinese premium brands are very confident that if they put in some time, some investment and some patience, they will see a huge opportunity in Europe,” said Tu Le, founder of consulting firm Sino Auto Insights.
Although defeating the charm and heritage Porsche and Mercedes will be a challenge, the attractiveness of the European market for Chinese companies is obvious. Luxury vehicles generate some of the highest profit margins in the industryand customers are more loyal and make repeat purchases. The segment is expected to overtake the mass market, offering a rare path to sustained expansion, according to McKinsey.
Europe is the main battleground as tensions between China and the US make expansion in North America virtually impossible.
